California Insurance Lawyer Blog

An article in U.S. News & World Report briefly mentions the travail our client Claire Krumpotich and her family have encountered with Conseco Senior Health Insurance Company. We've written several times before about Conseco, its financial problems, and its seeming unwillingness to make good long term care policies. Once again we have a client who has fallen victim to the company, and this time U.S. News is writing about it also. See: “Pros and Cons of Long-Term Care Insurance,” http://www.usnews.com/health/managing-your-healthcare/healthcare/articles/2009/12/21/pros-and-cons-of-long-term-care-insurance.html. While the article has a lot to say about how valuable LTC policies are if the insurer honors the terms of its contract, it fails to adequately describe the dilemmas of our client and many others like her who bought the policies years ago and are now vainly trying to get Conseco to admit their policies say what they say.

In our client’s case, Conseco continues to insist that her care does not meet her policy terms.

It appears that Conseco will not pay benefits because Claire no longer lives in a home similar to the one she resided at when she bought the policy, even though the word “home” is never defined in the policy.

Ironically, in July 2008, Conseco increased Claire’s premium payments because “[w]ith the introduction of assisted living facilities and adult day care, and the growth of home health care providers, consumers now have more options for receiving assistance than ever before. As a result, more insured’s are now using benefits and the cost of providing those benefits has increased.” Claire began paying almost $6600 a year, up from an initial premium of $470 a year when the she purchased the policy in 1990. Claire and others like her began paying for services Conseco now alleges they were never entitled to.

That sounds like insurance bad faith to us.

Unfortunately, U.S. News hasn't yet delved deep enough into the issue. The fact is that Ms. Krumpotich, and far too many others often must engage in protracted and nonsensical negotiations, and even litigation, in order to try and get claims paid. For the elderly and infirm, this is often an insurmountable challenge. A policy can look good on paper, but its value may be artificial. All we can say is read your policy carefully, research the company, and talk to others about their experience before paying for a benefit that may never materialize.

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Posted In: Insurance Bad Faith , LongTerm Care Insurance

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The CLASS Act, the part of the federal healthcare overhaul that creates a payroll deduction for long-term care similar to Social Security, may survive to make it into the final version of a combined congressional bill and become law, writes James Oliphant in the Los Angeles Times.“Government Insurance for Long-Term Care Likely to Slip Into Final Healthcare Bill,” http://www.latimes.com/news/nation-and-world/la-na-health-longterm31-2009dec31,0,4138098.story.

Members of both the Senate and House of Representatives support the act, which is voluntary and requires payment into the plan for five years before a participant is entitled to receive benefits. The CLASS Act is also controversial.

Proponents, particularly those who lobby for the elderly and disabled, praise the act because it allows people the option to remain in their homes, paying for in-home caregivers without depleting the resources and energy of family members. Opponents believe the act won’t pay for itself and will require a government bailout to remain functional.

We believe the discourse about long-term care insurance – whether through the government plan or private insurance – is a necessary discussion to alert this country about a very important aspect of planning for the future. Whether the CLASS Act is the right solution, and whether it will even survive the House, remains to be seen.

Either way, it's our opinion that for the time being insurers need to reformulate their offerings and claims paying practices in order that people can obtain and afford, and then realize the benefits they need.

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Long-term care advocate and blogger Howard Gleckman weighs in on the CLASS Act, the federal government’s long-term care proposal included in pending health care legislation, for Kaiser Health News. See “Will People Buy Government Long-Term Care Insurance,”
http://www.kaiserhealthnews.org/Columns/2009/November/111609Gleckman.aspx.

Gleckman predicts that significantly more people will purchase government LTC coverage than those who currently purchase private insurance, but it still won’t be enough to solve the nation’s long-term care challenges. To increase purchasers, Gleckman suggests the following:

First, make coverage mandatory and require all major employers to offer it. If employees are allowed to opt out, impose tough penalties on both employers and workers who don’t participate.

Second, do more to encourage young employees to buy coverage. Determine premium amounts by age at enrollment and never increase (or only moderately increase) premiums, while providing more benefits as policyholders age. That way, workers would enroll while they are young and healthy to avoid costly premiums when they need coverage.

Third, the government could give employers financial incentives to match worker contributions.

Let's see what, if anything, the ultimate health care bill will contain on the Long Term Care question.

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"Tort Reform, Tort Reform, Tort Reform," the phrase has almost become a song. Nobody likes to see undeserving people win huge, unjustified damage awards, but the fact is, it doesn't really happen in California, except on maybe on TV. Los Angeles Times business columnist Michael Hiltzik couldn’t be more correct when he writes that one of the biggest fans of so-called tort reform is the insurance industry, “because the less money they pay out to plaintiffs, the more they get to keep.” See “Why Tort Reform Is a Frivolous Diversion.”

While that statement is enough to make sensible people wary of the deep pockets behind tort reform movements, Hiltzik clears the confusion and makes a very good case about why limiting an injured victim’s ability to use the legal system to be made whole is not the great fix for rising medical costs insurers and many politicians claim.

The argument for tort reform, as Hiltzik explains, is that plaintiff lawyers are filing too many “frivolous” lawsuits and claiming millions of undeserved dollars. Doctors are ordering unnecessary tests to ensure they don’t misdiagnose or fail to diagnose something that could end up in court. As a result, medical costs escalate.

“The truth is that medical liability isn’t a big driver of health costs overall,” Hiltzik writes. “[T]he cost of malpractice litigation, in court and through defensive medicine, [is] roughly 2% to 3% of all U.S. healthcare spending.”

In California, since 1975, the Medical Injury Compensation Reform Act (MICRA) has capped recovery for pain and suffering to $250,000. That’s next to nothing when to compared to what plaintiffs can receive in other types of cases. Lawyers’ fees are also limited.

But did MICRA help consumers? According to a 2004 Rand study, the MICRA caps don’t amount to a fair distribution of justice. Victims of medical errors who had small economic losses but suffered major damage to their quality of life are unfairly compensated. Women are disproportionately affected. The MICRA cap isn’t adjusted for inflation. In today’s dollars, the award has the same purchasing power as $62,000 did in 1975. And the most unsettling result of all is that may unjustly injured people won’t even pursue a case because the award may not even cover the litigation cost.

The big MICRA winners are insurers, who last year paid out only 17 cents of every dollar they collected on medical malpractice insurance. And carriers don’t even have the good sense to be humble about it.

“At American Physicians Capital,” writes Hiltzik, “claims were falling so fast in 2007 that its chief executive publicly compared his underemployed claims managers to ‘the Maytag repairman.’ The next time you find yourself nodding in assent while some politician carries on about tort reform, remember that its benefits will go to characters like this.”

Clearly, this only reinforces what we’ve been saying all along: If you want real reform, start with the perpetrators, not the victims.

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Posted In: Health Insurance , Insurance Bad Faith , Life Insurance , LongTerm Care Insurance , LongTerm Disability (LTD) Insurance

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The LTC Guild, a forum for long-term care insurance agents, recently launched its “3 in 4 need more” campaign to educate consumers about the number of Americas over 65 who will likely require some type of long-term care service in their future. According to the U.S. Department of Health and Human Services, that’s about 70 percent of us.

The focus of the campaign is to highlight why long-term care insurance is such a necessity. Medicare will NOT cover most of the long-term care services the majority if us will need. Right now, long-term care is the only safety net for most people. In the highly unlikely event long-term care coverage becomes part of federal healthcare reform, that option may still not pay for the quality of services that a private plan would.

We support the LTC Guild’s public awareness campaign.

For more information about the “3 in 4 need more campaign, log on to http://ltcguild.ning.com/page/long-term-care-insurance-for.

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“Momentum for health reform may be building again, but interest in improving our system of long-term care supports and services is still lagging,” writes long-term care advocate Howard Gleckman in his newest blog post. Gleckman notes that while the CLASS Act, the late Sen. Edward Kennedy’s long-term care bill, has undergone changes this summer and received President Obama’s endorsement, the legislation could very likely fall victim to the controversy surrounding a public option for health insurance.

But the real reason LTC reform won’t happen is indifference, not opposition Gleckman says. “Overwhelmed by the passionate, high-stakes debate over health reform, many lawmakers remain reluctant to even confront long-term care issues. They are making a major mistake by failing to recognize that the chronically ill need a full range of care that does not end at hospital discharge or when they leave their physician’s office. An elderly widow suffering from Parkinson’s or a young man struggling with multiple sclerosis doesn’t distinguish between personal care and medical treatment. For them, it is all essential care. Congress needs to recognize this, but, at least for now, the odds that it will do so in 2009 remain long.”

So for right now, the best option is still private LTC insurance, or, in some cases, employer-provided LTC insurance coverage, which could be your only safety net if you long term care becomes essential due to age or infirmity. (090914)

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This week, New York Times blog, “The New Old Age,” answers questions about long-term care coverage and how the C.L.A.S.S. Act, a bill introduced by Sen. Edward Kennedy (D-Mass) that would establish a national long-term care insurance program, enjoys the possibility of being incorporated into congressional health care legislation. “Congress Tackles Long-Term Care.”

Most analysts appear surprised that the concept of a national LTC program has moved from the theoretical to a possibility of approval. Three congressional committees, however, still need to weigh in with a vote on the program.

Howard Gleckman, a senior researcher at the Urban Institute told the Times “that while some insurance companies oppose the idea, ‘the biggest problem the C.L.A.S.S. Act has isn’t opposition, but indifference — a sense on the Hill that they just don’t want to mess with long-term care.’”

Whether or not the measure passes as part of health care reform – which faces its own serious obstacles – placing the issue of the lack of long-term care coverage in the United States on the front page of major newspapers is helpful and informative for the millions of Americans who can still afford to purchase private coverage or have the capacity to push their employers to offer LTC as part of a benefits package.

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The Long Island Business News reports that many people think they have enough insurance until they need the policy. Then they learn its limitations, find they have insufficient coverage, or discover “loopholes big enough to drive a truck through.” Laura Glasser, “With Insurance, the Fine Print Matters,” June 30, 2009. This is particularly true, the article reports, for health and long-term care policyholders because they aren’t reading their policies to understand coverage limitations.

“One reason many people get surprises is they don’t know much about their coverage to begin with. If you’ve read your policy lately, you’re in the minority. Most health policies, for instance, cover up to $1 million in lifetime benefits. But most people don’t know that,” writes Glasser. Here’s what two insurance industry executives had to say about the situation:
“The information’s there,” said Ian Laird, director of strategy, sales and programs for Empire Blue Cross Blue Shield. “It’s just in a document that I don’t think the average person bothers to read.”

“You expect people to read their benefits,” said William Golden, chief executive of UnitedHealthcare’s health plan for New York, of the source of many surprises. “I’m not sure that really happens all the time. It’s important to read the small print.”
Here are two insurance executives admitting in black and white that they are selling policies that people don’t read, filled with fine print that limits coverage, and they appear just fine with the situation. In fact, one wonders if they might be taking advantage of this information by filling policies with fine print loopholes that end up surprising many people.

We say it everyday…and we’ll say it again here: READ YOUR POLICY BEFORE YOU NEED IT. If you don’t understand something, ask someone who can help.

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Posted In: Health Insurance , Insurance Bad Faith , Life Insurance , LongTerm Care Insurance , LongTerm Disability (LTD) Insurance

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Will the nation see healthcare reform by the end of summer? Although President Obama is confident he has a workable plan in place, most industry observers believe this latest attempt won’t fare any better than past attempts. “Obama Takes His Health Care Case to the Public,” New York Times.

The stalemate surrounds two issues. The first is the insurance industry’s refusal to consider the creation of a public insurance plan that would compete with the private sector. The industry has agreed to a compromise, which would mean more regulation of insurance premiums and insurer conduct. But we tend to think the industry will continue to fight any government intervention in how it does business.

The other issue involves eliminating the tax break on employer-provided plans. The compromise here might be a limited, less disruptive tax break, which Los Angeles Times columnist Ronald Brownstein says may be the trade off Americans are willing to make if it means slowing down the rise in healthcare costs. “In effect,” writes Brownstein, “limiting the tax exclusion would mean that those with coverage would be purchasing insurance for their insurance.” “Will Americans Buy a Healthcare Trade-Off?”

And then there’s Sen. Edward Kennedy’s bill that includes a long-term care provision that would make long-term care government-provided insurance available for $65 a month. The insurance would provide for modestly priced in-home care, not the more expensive nursing home care, and policyholders would have to pay into the system for five years before receiving benefits. “Senator Edward Kennedy Releases Health Care Bill; Includes Long-Term Care Provision.”
The likelihood of Kennedy’s bill making its way through Congress is negligible, since affordable long-term care insurance will be vigorously opposed the an industry that reaps considerable profits from sales of much more expensive policies. And that’s really the bottom line about why insurers will never support any substantial healthcare reform but will continue to oppose any meaningful legislation.

Insurers are in the business of making money, not providing healthcare. That’s why many companies delay and deny benefits or won’t even insure people who are ill. And they are doing so with little regulation and no competition. Why should they support change? The federal government wants to ensure that everyone in America has access to healthcare by creating affordable policies, while keeping down medical costs. Those two interests are counter to one another, and as long as the insurance industry has a dominate seat at the healthcare reform table, little will be accomplished.

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In U.S.A Today this week, elder-care author Howard Gleckman illuminates one of the most important but least discussed issues in the national debate about health care reform: What are we doing to help the elderly and disabled who don’t need acute hospital care but rather personal assistance in their homes. See, “What About Long-Term Care,” May 26, 2009,

Gleckman says Congress is ignoring its chance to change the way our country delivers long-term care ("LTC"), now mostly through Medicare that pays for nursing home treatment which costs thousands more a year than in-home care. Nursing home care could amount to as much as $75,000 a year; a home health aide is paid $20 an hour.

“Congress and President Obama could create a system of universal long-term care insurance, built on a combination of public and private coverage,” writes Gleckman. “They could end the reliance of millions on the welfare-like Medicaid system while reducing the tremendous pressure that program is putting on both state and federal budgets. And, they could further shift the focus of long-term assistance to community care instead of nursing facilities.”

But, concludes Gleckman, long-term care reform is unlikely to happen even though Sen. Edward Kennedy and Rep. Frank Pallone have proposed government-provided LTC insurance that could cost as little as $100 a month.

So where does that leave us? If you are among the seven million Americans who can afford private LTC coverage, you are in good shape to preserve your assets and savings as you age or become disabled. For the rest, this is another wake-up call. Any health reform the federal government is likely to approve won’t be much help for the elderly and disabled. Medicare won’t pay for home health aid, and Medicaid only covers some costs after the patient is impoverished.

Why isn’t the federal government creating a more comprehensive plan? Most likely because it is not getting much help from the most important stakeholder when it comes to the economics of health care, the insurance industry. That industry doesn’t want to take care of the sick, the elderly and the disabled. Rather, insurers are in the business of making money for shareholders. By issuing policies to healthy people then trying to find ways to deny coverage when they get ill, profits can be enhanced. And because they have been getting away with these practices for years means they have no incentive to devise a revolutionary public-private partnership that would provide affordable health care to Americans from the cradle to the grave.

Gleckman calls it a tragedy. What do you think?

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In 2000, BusinessWeek wrote about Belle and Abe Lieberman, a Nebraska couple who had purchased a long-term care policy from Penn Treaty Network America Insurance Company. See “Long Term Policies That Will Last.” Back then, the Leiberman’s chief concern was not having purchased a policy that adjusted for inflation. When they increased their benefit from $50 to $100 a day, the yearly premiums jumped from $2,264 to $7,750. They could barely afford the insurance. Little did they know a decade ago that inflation adjustment might be the least of their worries.

About a year later, in April 2001, ElderWeb.com reported that Penn Treaty’s auditors had expressed doubts about the company’s 2000 financial statements. Penn Treaty’s reserves to pay claims had fallen below the regulatory limit and the carrier would need to generate an additional $40 million that year to ensure liquidity. See “Financial Problems for #2 LTC Insurer Penn Treaty.”

By July 8, 2004, Standard & Poor’s still rated Penn Treaty a B- but showed a positive outlook because the company had improved its underwriting and claims practices. The rating service found that the insurer was “Aged, Frail and Denied Care by Their Insurers.” In 2005, Penn Treaty was receiving one complaint for every 1,207 policyholders, one year after collecting $320 million in premiums. (By comparison, Genworth Financial received only one complaint for every 12,434 policyholders.) I spoke with reporter Charles Duhigg for this article, explaining how many LTC insurers conducted business as little more than profit centers, with little regard for their policyholders.

By October 3, 2007, complaints about claims-handling procedures prompted the Senate Finance Committee to conduct hearings. Complaints about LTC coverage had risen 92 percent between 2001 and 2006, reported the New York Times, “Scrutiny for Insurers of the Aged.” Congress asked Penn Treaty, along with Conseco and Genworth Financial, “to provide detailed information about how policyholders’ claims, inquiries and denials are handled and whether employees receive rewards for denying claims.”

In early 2008, rather than focusing on the delivery of services to its policyholders, Penn Treaty hired a new chief marketing officer to expand its national marketing efforts, and two national marketers to assist financial planners in selling Penn Treaty LTC policies. In October 2008, Street.com reported that Penn Treaty “fails,” two days after Pennsylvania insurance regulators seized the company. Options were to sell or liquidate. A March 13, 2009, letter to policyholders explained the Pennsylvania Insurance Commissioner Joel Ario is performing a financial analysis of the company with plans for “rehabilitation.”

What went wrong with Penn Treaty and what can other LTC carriers learn from its demise? First, it seems that Penn Treaty failed to properly underwrite the business, but no one noticed. The young, immature market, supported Penn Treaty's mistakes because they continued to offer product at low prices. When the claims finally started coming in, faster and more furious than predicted, Penn Treaty had little choice but to do everything it could to limit claims pay exposure. This led it to stop being responsive to its customer’s needs and start chasing revenue by way ramping up sales. Hindsight is 20-20, but for Penn Treaty policyholders an old addage proved to be true:"if it sounds too good to be true, it probably is."

And we can’t forget about Belle and Abe Lieberman, the Nebraska couple who sacrificed to pay for an LTC policy they believed would last. We hope the Pennsylvania Insurance Commissioner – and every insurance commissioner around the country who should be evaluating and regulating other LTC carriers before they fail – won’t forget them either.

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The Wall Street Journal reported last month about growing concern among consumers about the safety of their insurance policies as insurers of all sizes suffer losses from their bad investments. Other carriers are being “dragged down by higher than expected claims in areas like long-term care insurance.” M.P. McQueen, “Worry Grows Over Insurers as Ratings Slip.”

The article refers to recent events in which regulators took over long-term care subsidiaries of Conseco Inc. and Penn Treaty American Corp. because their reserves fell below state-mandated levels of available capital.

“More trouble could be on the horizon,” writes McQueen. “More than a dozen major insurers have seen ratings downgrades in recent weeks, and several have dropped into categories reflecting relatively weaker financial health. Analysts say their ability to pay claims could be affected by continuing investment losses.”

We’ve been documenting this growing problem on our blog for some time now. And our best advice to consumers with potential claims is not to wait until you hear your long-term care insurer is targeted by regulators. Investigate their financial status now, and if the numbers worry you, perhaps start looking for alternate coverage. Talk to your agent or financial advisor, who may be able to transfer you into similar policies at a more secure company. It may cost you more, but that is better than paying for something that may ultimately have no value. If you already have a claim make sure you pursue it actively and expeditiously. If you need help, call us (800-446-7529), or any other person you know and trust who can help you.

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A late 2008 Avalere Health study and chart book commissioned by Long Beach healthcare nonprofit, The SCAN Foundation, contains information that appears to have surprised a lot of people connected with the long-term care industry. The analysis, “Long Term Care: an Essential Element of Healthcare Reform,” reported that seniors, people with disabilities and their families in the United States pay nearly 30 percent of LTC services out of their own pockets – nearly 10 percent more than previous estimates.

In dollars, that means that in 2006, the most recent year figures are available, individuals and their families provided $64 billion out of their own assets to pay for long-term care. Unpaid caregivers, usually family members sacrificing time and resources to care for loved ones at home, provided $350 billion worth of free care. In comparison, private health and LTC insurance contributed slightly more than $16 billion.

The study, which intended to look at Medicare and Medicaid contributions to long-term care in order to propose policy changes, included the private contributions because the figures was so startling to even seasoned policymakers.

“To finance these contributions, most seniors and their families rely on home equity, income from adult children, or retirement savings,” Avalere Health wrote in a press release earlier this month. “All of these asset classes have lost considerable value over the past year, resulting in diminishing funding capacity in the face of a rapidly growing long-term care population.”

The reason private insurance’s contribution to pay for long-term care is so low is twofold. Too few people purchase LTC coverage because it has been too expensive. During the past couple of years, states have partnered with LTC carriers to make coverage more affordable. These policies are worth considering.

The second reason is that insurers are experts at finding ways to delay and deny LTC benefits. If you are old or sick, they figure time is on their side. Some LTC carriers had undercapitalized or spun-off their LTC divisions in such a way that their funds may not outlast their pool of policyholders.

Yet despite these drawbacks, the alternative is far bleaker. Better to purchase LTC coverage now and fight the company for benefits later, than become part of that rapidly growing percentage of people exhausting their assets to pay for care.

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With the nation’s financial crisis affecting most American’s retirement accounts, well-known financial-planning expert Robert Valentine recently wrote about why Long Term Care (LTC) insurance is becoming more of an obvious choice than ever before. LTC insurance not only protects investment assets, he says, it also ensures you have a choice in the quality and type of care you receive, something we’ve been pointing out in many of our LTC posts.

Valentine encourages consumers to consider five factors before purchasing LTC coverage:
• Purchase from a solid “A” rated insurer who will likely keep premiums affordable and honor your claim.
• The policy should offer a yearly cost of living adjustment to keep up with inflation.
• Make sure the policy provides for both home and institutional care.
• To ensure tax-free status, opt for a qualified over a non-qualified policy.
• Only purchase a policy that is guaranteed for life and will not be cancelled if your health declines.

These are very good tips. We generally agree with the concept of LTC, but only from financially strong, and reputable carriers…and only when the coverage is clearly spelled out, and covers the things you specifically seek to have covered. There is nothing worse than paying premiums for years and years, all with the expectation of having insurance when you really need it, only to learn that the insurance company is relying on some loophole to deny your benefits. Believe it or not, denials like this happen every single day. We work hard to try and make sure it doesn’t happen to our clients.

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Investment News reported this week that the Pennsylvania Insurance Department has seized control of two subsidiaries of long-term care insurer Penn Treaty American Corp. because of their failure to maintain appropriate capital levels. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090107/REG/901079993.
According to Commissioner Joel Ario, the department hopes to “rehabilitate” Penn Treaty Network and American Network Insurance Company and place them back in the private section. Although the companies are insolvent, says Ario, the state will continue to pay claims. If the insurer cannot be rehabilitated, it will be liquidated and the state will then guarantee each policy up to $300,000.

What this means for California policyholders is still unclear, but individuals with potential claims against the company should act now. The outcome will likely be far from positive. 1/7/09

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This week the Pennsylvania Department of Insurance approved a crazy plan that allowed Conseco, Inc., a nationwide provider of long-term care insurance, to “separate” itself from that business by placing its remaining LTC policies (reported at between 140,000 and 160,000 total polices) into what many experts believe is an underfunded trust. See http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081113/REG/811139970.

What were they thinking? And what are the implications for both Conseco policyholders and those insured by other LTC carriers?

The bad news is that this is a dangerous precedent. If the trust is indeed not adequately capitalized, remaining elderly and ill policyholders could be subjected to ongoing rate increases. Because the group is closed, no members will be added to supply new capital to the trust. Those who have the good fortune to live the longest may have the misfortune of needing benefits when the money is gone.

The other bad news is we don’t know how many other LTC carriers will decide following Conseco’s example might be a good business decision for them. They may determine profits are more important than promises and try to divest their companies of expensive LTC policies.

The good news, however, is that insurance commissioners around the country vigorously objected to Pennsylvania’s failure to hold public hearings to field objections to the new trust. Chances are, insurers incorporated in other states won’t get a green light to do the same thing, at least not without intense scrutiny.

The other good news is that not all LTC carriers have run their LTC businesses into the ground. Some are managing quite well, selling affordable policies and caring for their policyholders. Their diligence continues to make LTC insurance a safe and essential component of everyone’s retirement planning.

The final good news is that lawyers like us are still in the business of making insurers live up to their end of the bargain. We’ve litigated against Conseco in the past and have been part of the outcry against regulators allowing Conseco or any insurer to get out from under their obligations. If we have anything to say about it, the fight to keep Conseco responsible isn’t over.

(12/10/08)

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Investment News reports today that Conseco Inc., “despite vehement objections from state regulators” has completed the transfer of its remaining long-care insurance policies into an independent trust after the Pennsylvania Department of Insurance approved the carrier’s reprehensible plan to disavow its responsibility to provide coverage for its policyholders when they need it. See http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081113/REG/811139970.

The sad fact is that most of the policyholders are too old or too ill to put up much of a fight. Insurance commissions from around the country, including California Insurance Commissioner Steve Poizner, had vigorously urged the Pennsylvania commissioner to hold public hearings, fearing the Senior Health Care Oversight Trust was inadequately capitalized. Those requests were ignored.

From the beginning, Conseco’s handling of its undercapitalized LTC business has been an embarrassment to the entire LTC industry, which includes a number of carriers that operate with integrity in the claims-handling and benefits-paying process. Conseco stood out for its lack of empathy for seriously ill policyholders relying on the company’s promises. The demise of Conseco’s LTC business has been a long, unpleasant saga for many of its consumers, and this latest chapter does not reflect well on the company nor offer much solace for the remaining policyholders.

Now it’s time for plaintiffs’ lawyers to step in to clean up the mess created by corporate ineptitude and government kowtowing. 11/20/08

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The Internal Revenue Service released this month long-term care premium deductions for 2009.

Policies issued on or after January 1, 1997, will qualify for the deduction if they adhere to regulations established by the National Association of Insurance Commissioners. Among the requirements are that the policy must offer the consumer the options of "inflation" and "nonforfeiture" protection, although the consumer can choose not to purchase these features. Policies purchased before January 1, 1997, will be grandfathered and treated as "qualified" as long as they have been approved by the insurance commissioner of the state in which they are sold

“Qualified” premiums are tax deductible as long as they exceed 7.5 percent of adjusted gross income, along with other unreimbursed medical expenses. (If you are self-employed, you may deduct the entire premium.) To be qualified, an LTC policy must have been purchased before 1997 and meet National Association of Insurance Commissioners’ regulations. Policies purchased before 1997 may still qualify if they have been approved by the insurance commissioner of the state where they were sold.

If you are between 50 and 60 years old, for 2009 you can deduct a maximum of $1,190. That’s likely less than half of what you pay yearly for coverage. Nevertheless, the deduction could make the policy more affordable in the long run. [NOTE- We are not accountants or tax advisers. Check with your own personal tax professional before relying on the deductibility of costs discussed herein.]

You may have noticed that state governments are now creating public-private partnerships with LTC providers to educate people about planning for long-term care, and to encourage them to buy private insurance. This is our governments attempt to shift the burden from government, whose resources are rapidly diminishing, to the individual. The federal government could do its part by making the tax deduction a more in line with the actual cost of the insurance in order to encourage the middle class baby boomers to purchase LTC insurance. That would make the coming cost-shift from public to private senior-care a little less burdensome.

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In an annual report released October 17, 2008, the Centers for Medicare and Medicaid Services (CMS) predicted that during the next 10 years, spending on Medicaid for low-income seniors will outpace the rate of growth in the U.S. economy. See

This means, according to Health and Human Services Secretary Mike Leavitt, “that the current path of Medicaid spending is unsustainable for both federal and state governments. We must act quickly to keep state Medicaid programs fiscally sound.”

States are already struggling to keep up with Medicaid cost. In considering a second economic stimulus package, lawmakers are contemplating supplying federal funds directly to states to pay costs of running government programs, including Medicaid. The outlook for government long-term care assistance is increasingly more dismal.

This is frightening news given our aging population and the seeming increase in need for medical services. People who are fortunate enough to be able to afford health insurance, and long term care plans from quality providers will probably be okay, assuming their insurers pay benefits (which we know from experience is not always the case). Still those people represent only a small minority of our population. The future of health and long term care in this country is getting closer to a breaking point.

The full CMS report is available by following this link: http://www.cms.hhs.gov/ActuarialStudies/downloads/MedicaidReport2008.pdf.

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Posted In: Health Insurance , LongTerm Care Insurance

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In a little publicized but highly consequential move, Conseco Senior Health Insurance Company, a leading provider of controversial long-term care insurance policies, requested Pennsylvania Insurance Commissioner Joel Ario establish a new company, Senior Health Insurance Company of Pennsylvania, to manage its 150,000 or so long-term care polices as the company struggles to remain solvent. Click here to review documents and comments.

In a letter to Ario, California Insurance Commissioner Steve Poizner expressed his concern that creation of a new trust would have a detrimental effect on policyholders around the nation, including California, leading to “unaffordable rate increases and the eventual insolvency of the trust.” Poizner exhorted Ario to make no decision without conducting a public hearing, even though Pennsylvania law does not require one.

Bonnie Burns, of California Health Advocates, was even more to the point: “I am writing to you with alarm,” she began as she urged Ario to deny Conseco’s attempt to “dump” its LTC polices thereby “creating a virtual death spiral from which there will be no recovery.”

Joseph Belth, professor emeritus of insurance in the Kelley School of Business at Indiana University and editor of “The Insurance Forum,” closely examined Conseco’s proposal. He advocates Ario should not merely disapprove the plan, but also should immediately seize Conseco Senior Health Insurance with a goal of preserving the assets then selling or rehabilitating the company. This alternative, he believes, would avoid “the drastic alternative of liquidation.” See http://www.ins.state.pa.us/ins/lib/ins/conseco/034.pdf.

Futhermore, says Belth, Conseco’s plan “would lead to a series of substantial premium increase requests that would place state insurance regulators across the country in a difficult position. Approval of the requests would place a severe burden on policyholders, most of whom are seniors, and force them to make difficult decisions about whether to absorb the increases or discontinue the policies.”

What happens in Pennsylvania will have repercussion around the country. If Conseco is let off the hook, how many other LTC and disability insurers will attempt to evade responsibility? How many more policyholder might be forced to wait in line for a shrinking pool of benefits when they need coverage?

Insurance commissioners around the country need to step up to protect policyholders by finding alternatives similar to the one Belth proposes. And insurers need to take note: The Conseco dilemma is a case study in how not to run your business.

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Posted In: Insurance Bad Faith , LongTerm Care Insurance

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October is “Long-Term Care Planning Month,” according to founder Marilee Kern Driscoll, author of “The Complete Idiot’s Guide to Long-Term Care Planning.” She begins the celebration by exploring what each of the presidential candidates has to say about long-term care.

I use the word “explore” because apparently Driscoll couldn’t find much on the topic except what each candidate had posted his respective Web site. Typically, and sadly, long-term care is not one of the top 10 campaign issues.

Sen. Obama’s web site promises, among other things, that he will work to give seniors choices about their care, consistent with their needs, and not biased towards institutional care. That’s all well and good, Driscoll agrees, but won’t that have the dreaded “woodwork effect” pointed out in the 1980’s by Rep. Claude Peters: If the government Medicaid program started paying for long-term care where individuals wanted it (NOT in a nursing home), applicants for this taxpayer-funded program would “come out of the woodwork.”

Sen. McCain’s proposal is problematic as well, says Driscoll, and is essentially a rehashing of programs that pay for in-home care for the financially and medically needed. He has no new ideas about how to finance long-term care for the middle-class.

Driscoll concludes that Americans are going to “have to wait to find out exactly what, if any, long-term care reforms these candidates will champion.”

Long term care options issues are going to explode over the next two decades. Private insurance is one solution, but it is expensive, and as we know from the many cases we have and continue to handle, benefits are not always paid when they should be and lawsuits become necessary. Is a government solution the answer? Maybe, but we will have to see what real solutions might be proposed by the victorious candidate and his new congress.

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At Kantor & Kantor we hear from people every day about their troubles in trying to obtain benefits under Long Term Disability, Long Term Care, Health and Life insurance policies. We created our Blog as a way to try and share some of the stories we hear, as well as the news being made in these and other related insurance areas.

Well, it seems people are reading our Blog and getting a benefit out of our efforts, all of which makes it even more worthwhile. Our Blog was just recently named as one of the Top 50 Legal Blogsites by the LexisNexis Insurance Law Center. This is what they had to say: "These blogsites contain some of the best writing out there on insurance on coverage, catastrophic loss, regulatory compliance, life insurance, health care and insurance issues in general,...They contain a wealth of information for the insurance community with timely news items, practical information, expert analysis, frequent postings and helpful links to other sites. These blogsites also show us how insurance issues interact with politics and culture. Moreover, they demonstrate how bloggers can impact the world of insurance law and insurance industry issues.”

Thanks LexisNexis. We will keep on blogging!

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Posted In: ERISA , Health Insurance , Insurance Bad Faith , Life Insurance , LongTerm Care Insurance , LongTerm Disability (LTD) Insurance

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Insurers throughout the country are asking state insurance regulators to allow price increases for long-term care insurance. Essentially, they are admitting they made mistakes early on by pricing the policies too low in order to compete for business. Now, faced with an aging baby boomer population, these companies are concerned they will be paying out more in claims than they anticipated. They want to counter this by charging their customers more money. An article from TheStreet.com reports in the past year, Genworth Financial requested increases ranging from 8% to 12% on some policies already owned by its customers; John Hancock announced a 14% increase in some existing policies in May 2008; and this week, MetLife announced it will raise annual premiums an average of 18% for policy holders who were younger than age 70 when they purchased policies in the years from 1998 through 2005.

Financial consultant and columnist Terry Savage queries, “isn't it the job of the insurance company to assess those trends that impact pricing before they go to market -- whether they be the rising cost of providing benefits or the cost of hedging against low interest rates that impact the investment of their reserves?”

We agree with Savage that insurance companies could be doing much better with customer service in selling, servicing and particularly in paying claims.

Still, Savage is an advocate for the purchase of long term care insurance, especially when compared to the alternative of relying on the government. She cautions against relying on government-funded programs such as Medicare to pay for long-term care because quality care options through government programs are shrinking rapidly.

And remember, the need for long-term care may arise long before you or your spouse even reach retirement or “long term care” age. Illnesses such as multiple sclerosis, fibromyalgia, Alzheimer’s, AIDS, lupus and a host of other debilitating ailments too numerous to name here may require assisted living or in-home care for years. We know because we help people with these issues every day.

With all the roadblocks policyholders often face when dealing with insurers – including having to hire lawyers like us to fight for their benefits – it’s still probably better to have some insurance than none at all.

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Our friend Bonnie Burns testified before the House Energy and Commerce Oversight and Investigations subcommittee last week about the need for federal standards governing private long-term care insurance policies. Burns, a policy specialist at the Medicare advocacy organization California Health Advocates, pointed out the “disconnect between those services available in a community and the way they are described in an insurance policy, and no two companies have the same definitions.”

We agree with Bonnie that uniformity can help consumers more fully understand what they are purchasing and what they can expect when they need benefits. Limited federal intervention in this area may assist the industry to develop affordable products that would appeal to the public the same way life, automobile and home insurance does. Many states are doing an excellent job of educating their residents about the value of long-term care insurance.

What would really make a difference, however, would be if the insurance industry would begin to police itself before the federal government has to address long-term care the same way it did retirement benefits through ERISA, the Employees Retirement and Income Security Act, which has been a bureaucratic headache since its inception. The industry needs to take an honest survey of its claims-handling practices, ending the “delay-and-deny” tactics so many policyholders are subjected to.

While industry experts such as Marc Cohen, president of the long-term care consulting firm Life Plans, who also testified before the subcommittee, continue to insist that unresolved disagreements between long-term care policyholders and carriers remain less than 5 percent of all claims, the widespread dissatisfaction with claims-handling tends to belie that statistic.

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The debate about how beneficial long-term care insurance really is continues. Recently, the ZDNet Healthcare blog, posted comments responding to business journalist Dana Blankenhorn’s article “The running scandal of long-term care insurance,” Those comments tipped slightly in favor of some insurance as opposed to none at all.

Blankenhorn points out that the cost of care for someone with an illness such as Alzheimer’s or Parkinson’s disease, which may require many years of skilled or home care, is not realistically insurable. Blankenhorn argues that the insurance industry isn’t able to write a policy without caps because “premiums on a policy guaranteeing us quality care for however long we may need it would be too high to bear. And everything else is a scam.”

He tells the story of Martin Kenneth Bayne, aka Mr. Long-Term Care, a former insurance salesman and advocate for “properly drawn” policies, now in an assisted living facility suffering from Parkinson’s. His long-term care policy pays an annual benefit of $86,000. That provides a $400 square-foot room and care the quality of which, according to Blankenhorn, leads Bayne to “rage concerning his treatment and the failure of the insurance industry to protect anyone.”

But the truth is, most people who need it will never receive the quantity of benefits Mr. Long-Term Care doesn’t appreciate, and those who rely on shrinking government benefits would likely covet his situation.

Is this the stuff of nightmares? Not entirely. Healthcare psychologists have estimated that men turning 65 in 2005 will average up to three years of institutional, formal or informal home care in their lifetimes. Women average as much as 3.7 years of care. Only 31 percent of that population will not need any LTC, but at least 20 percent will require LTC for more than five years. Kemper, Peter, Harriet Komisar, and Lisa Alecxih, “Long Term Care Over an Uncertain Future: What Can Current Retirees Expect?” Inquiry, Vol. 42, No. 4, pp. 335-350 (Winter 2005-06).

These statistics contradict Blankenhorn’s worst-case scenario. But who can predict the state of medical science in 10 years or the baby-boomer generation’s desire to celebrate centennials.

The moral of this story is, buy the best LTC coverage you can afford, pray you never need the benefits, but be prepared to fight for them if you do.

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We have been helping people with claims against insurance companies for over 18 years. Obviously, there is a lot to know about this process. From the countless claim appeals and lawsuits we have handled over the years, three basic, yet critical considerations rise to the top of our list of things to keep in mind when making a health related insurance claim:

1) ALWAYS GET A COPY OF THE POLICY, AND READ IT, BEFORE MAKING YOUR CLAIM.

It may seem obvious to suggest a careful read of the policy, but we have encountered countless people who forget about this critical step. Almost every insurance policy is written with subtle (and not so subtle) limitations on or exceptions to coverage. Look for things such as “mental and nervous” or “own occupation vs. any occupation” in exceptions in Long Term Disability policies. In health policies, look for limitations on “experimental” or therapeutic treatments, brand name pharmaceuticals, eating or psychiatric disorders. Long term care policies might require lengthy periods of hospitalization, or skilled nursing as prerequisites to coverage, or may condition coverage on an unreasonable definition of incapacity. Insurance companies are notorious for trying to characterize a claim so that it falls within one of the limitations or exceptions, and oftentimes mischaracterize an unwary claimant’s own words or writings to try and support a denial.

Often, policies are governed by ERISA (Employee Retirement Income Security Act) which is a Federal Law with very specific mandates about insurance claims, and can severely limit the available remedies.

2) PAY CAREFUL ATTENTION TO THE TIME LIMITATIONS SET FORTH IN THE PLAN.

Almost every policy has specific time limitations relating to things such as when a claim must be made, how much time the insurance company has to respond to a claim, and/or how long a claimant has to file a lawsuit if the claim is denied. The time limits are one of the very first things to look at, and calendar, when reviewing your policy. You might be able to make some legal arguments to avoid the harsh consequences of failing to comply with these deadlines insofar as they pertain to pursuing your claim, but it is always wise to act as though the deadlines are absolute.

3) ALWAYS COMMUNICATE WITH THE INSURANCE COMPANY IN WRITING, KEEP COPIES, AND USE CERTIFIED MAIL.

Insurance companies are in the practice of making copious notes about the substance of every phone conversation they have with an insured. The problem is, those notes may not always accurately reflect what you communicated, or even how the company representative communicated with you. The best solution to this is for you to send your questions in writing, AND to always confirm the substance of important conversations with a follow-up letter. If you can, try to get an email address for your representative, as email can serve as a very good substitute when sending letters via certified mail might be difficult.

Paying attention to these three simple rules related to insurance claims can greatly increase the probability of a successful claim, or if necessary, a successful lawsuit to force claim payment.

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Posted In: ERISA , Health Insurance , Insurance Bad Faith , Life Insurance , LongTerm Care Insurance , LongTerm Disability (LTD) Insurance

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As one of its top ten financial resolutions for 2008, Union Bank of California advises people to invest in long-term care insurance as part of a financial safety net for their families. Along with the government, private companies see the validity of both long-term care and disability insurance to help individuals deal with exorbitant medical costs. Some estimates predict that 50 percent of the population may need to rely on these types of policies in the future.

We agree that long-term care and disability policies are increasingly important insurance coverage. But purchasing a policy now doesn’t necessarily mean that coverage will be available when you need it.

People with Fibromyalgia, Lupus, Epstein Barr, Multiple Sclerosis, and Chronic Fatigue have few financial options aside from specialized insurance coverage. But we have seen an increase in insurance companies’ erroneous denial of individuals’ long-term care, long-term disability and health claims. Life is difficult enough for people suffering from a chronic illness, and we understand that having their claims denied by their private insurance company only exacerbates the situation.

The following are a few facts that highlight the problem:

• The government isn’t going to pay for long-term care at home, in a nursing home or in an assisted living center. Medicare pays 100 percent of long-term care for 20 days and all but $95 a day for the next 80 days. After that, nothing. And Medicare only pays for skilled care; most long-term care is not skilled care.
• The national average cost for nursing homes is approximately $105 a day. Assisted living ranges anywhere from $50 to $90 a day. These costs are perfectly capable of wiping out a lifetime of savings, not to mention the emotional effect long-term care has on a family.
• At age 65, a woman has a one out of two chance of spending some time in a nursing home. A man has a one out of three chance. In the case of men, mortality catches up with morbidity.
• Children would like to help, but children often have kids of their own. They certainly can’t quit their jobs to care for their parents.
• Most people want to choose where they go instead of having to go where they are taken, and if independence is important to them, they will need to have either a large estate or adequate insurance.

All this means that most people are better off with some form of long-term care or disability insurance than none at all. And when the time comes that you need it, we sincerely hope you are among the fortunate few who see the return on their investment. If you are not, we can help.

GK

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